LIBERTY
CORNER, New Jersey -- August -- 11, 2005
-- Fedders Corporation (NYSE: FJC), a leading
global manufacturer of air treatment products,
including air conditioners, air cleaners, dehumidifiers
and humidifiers and thermal technology products,
today reiterates that as has been previously
reported, the company has not yet filed its
Annual Report on Form 10-K for 2004 or its Quarterly
Report on Form 10-Q for the first quarter of
2005. Until those two filings are completed,
the company will not be able to file its report
for the second quarter and six months of 2005.
The
Company anticipates that, as a result of increased
inventory of room air conditioners in key North
American markets carried over from 2004, which
was caused by cooler than normal weather in
2004, net sales in the second quarter ended
June 30, 2005 will decrease 29% to approximately
$127 million from net sales of $178.1 million
in the second quarter of 2004. It is anticipated
that this inventory has also caused a reduction
in net sales for the six months ended June 30,
2005 of 31% to approximately $205 million from
net sales of $297.4 million in the six months
ended June 30, 2004. The more favorable weather
in key North American markets during 2005 is
having the effect of clearing inventories through
distribution channels and positioning the industry
well going into 2006.
During
the second quarter and six months ended June
30, 2005, the company manufactured fewer room
air conditioners than in the prior year in order
to reduce inventories. Reduced production has
the effect of increasing costs as a result of
lower overhead absorption. The company anticipates
that, despite increased costs related to lower
overhead absorption and inflationary pressures
on raw materials, its gross profit margin as
a percentage of net sales has increased as a
result of more favorable product mix and price
increases initiated to offset material cost
increases realized during 2004. It is anticipated
that the gross margin for the 2005 second quarter
increased to approximately 20% versus 16.2%
in the prior year period and for the 2005 six-month
period to approximately 20% versus 17.0% in
the prior year period.
The
company anticipates a net loss of approximately
$0.6 million during the quarter ended June 30,
2005, compared to net income of $2.3 million
in the quarter ended June 30, 2004. For the
six-month period ended June 30, 2005, the company
anticipates a loss of $5.4 million versus a
loss of $2.9 in the six months ended June 30,
2004, which included a charge related to the
extinguishment of debt of $8.1 million.
This
news release includes forward-looking statements
that are covered under the "Safe-Harbor"
clause of the Private Securities Litigation
Reform Act of 1995. Such statements are based
upon current expectations and assumptions. Actual
results could differ materially from those currently
anticipated as a result of known and unknown
risks and uncertainties including, but not limited
to, weather and economic, political, market
and industry conditions and reliance on key
customers. Such factors are described in Fedders'
SEC filings, including its most recently filed
annual report on Form 10-K. The company disclaims
any obligation to update any forward-looking
statements to incorporate developments occurring
after release of this announcement. Visit the
Fedders investor information website at http://www.fedders.com
to access additional information on Fedders.
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